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Probiotec LimitedHY21 Results & Outlook
ASX : PBP
25 February 2021
Disclaimer
This presentation is provided for general information purposes only. The information contained in this presentation is not intended to be relied uponas advice to investors and does not take into account the investment objectives, financial situation or needs of any particular investor. Investors shouldassess their own individual financial circumstances and consider talking to a financial adviser or consultant before making any investment decision.
This presentation is not a prospectus, investment statement or disclosure document, or an offer of shares for subscription, or sale, in any jurisdiction.
Certain statements in this presentation constitute forward looking statements. Such forward looking statements involve known and unknown risks,uncertainties, assumptions and other important factors, many of which are beyond the control of the Company and which may cause actual results,performance or achievements to differ materially from those expressed or implied by such statements.
While all reasonable care has been taken in relation to the preparation of this presentation, none of the Company, its subsidiaries, or their respectivedirectors, officers, employees, contractors or agents accepts responsibility for any loss or damage resulting from the use of or reliance on thispresentation by any person.
Past performance is not indicative of future performance and no guarantee of future returns is implied or given.
Some of the information in this presentation is based on unaudited financial data which may be subject to change.
All values are expressed in Australian Dollars unless otherwise stated.
2Probiotec HY21 Results
Financial Highlights
Probiotec HY21 Results 3
$42.6m(3%) on HY20
Revenue
$7.4m+20% on HY20
Underlying EBITDA 1
$5.6m+26% on HY20
Underlying EBIT 1
2.0 cps+33% on HY20
Half Year Dividend
(1) Underlying financial results exclude Amortisation of acquired Intangibles and non-recurring transaction costs
4.8 cps+28% on HY20
Underlying EPS
$7.9m>100% of Underlying EBITDA
Cashflow Generation
Key Highlights
4
• Transformative acquisition of Multipack LJM completed on 31 December 2020, with control passing to Probiotec on 1 January 2021
• Strong relationships with a range of global FMCG and Consumer Healthcare clients• Performance since announcement has been stronger than expected
• Pleasing revenue performance with strong levels of organic new business generation across manufacturing and packing offsetting weakness in cough & cold sales (which are expected to recover in FY22)
• Earnings performance was strong, reflecting our ongoing focus on operating efficiency and rebasing of cost structures in response to COVID
• Strong cash generation supports increased returns for shareholders
• Term debt maturities extended for 3 years as part of the Multipack transaction
• Range of acquisition opportunities continuing to be assessed
Strong performance achieved in HY21 despite uncertain environment
Probiotec HY21 Results
Multipack-LJM Acquisition
5Probiotec HY21 Results
Transformative acquisition with an attractive growth profile
• Acquisition of Multipack LJM was completed on 31 December 2020, with control passing to Probiotec on 1 January 2021
• Key management personnel retained
• Multipack-LJM performance has been stronger than we anticipated at the time of the transaction, with record performance observed over recent months delivering confidence for a materially higher result than the business delivered in FY20
• Strong focus on maximising shareholder value • Maximising synergies across the combined group• Potential site consolidation and other cost-out
opportunities
Natural extension of Probiotec’s packing operations
Creates greater scale and diversification across customers, end-markets and services
Introduces new customer relationships which can be leveraged into new manufacturing opportunities and underpins expansion into new products
Opportunity to consolidate Probiotec’s Sydney packing footprint over next 18-36 months
Attractive entry multiple positioning for strong returns for shareholders
Overview Investment Highlights
6Probiotec HY21 Results
Multipack-LJM Eastern Creek facility
Delivering Scale
7Probiotec HY21 Results
LJM Marketing Services Dandenong facility
Delivering Scale
HY21 Earnings Breakdown
8All figures in A$’m unless indicated
H1 FY211
Sales revenue 42.6
EBITDA 7.4
D&A (excl Acquired Intangibles) (1.8)
EBIT 5.6
Interest (1.1)
Tax (0.9)
NPAT 3.6
Shares on Issue (‘millions) 74.8
EPS (underlying) – cps 4.8
Probiotec HY21 Results
HY21 Results Snapshot Reconciliation and Comparison
H1 FY211
Actual Adj. 1 Underlying Vs PCP
EBITDA 5.9 +1.6 7.4 +20%
EBIT-a 3.3 +2.4 5.6 +26%
NPAT-a 1.2 +2.4 3.6 +44%
EPS-a 1.7c +3.2c 4.8c +28%
(1) Underlying financial results exclude Amortisation of acquired Intangibles and non-recurring transaction costs
Driving earnings growing despite uncertain environment
9
Balance Sheet & Cashflow
Underlying Cash Flow from Operations
Strong focus on optimising working capital and capex to achievestrong cashflow generation and drive returns
Net Capex over the HY21 period totalled $33.3m, comprising
− Acquisitions & intangible asset purchases$28.3m
− Plant & equipment $1.1m
− Asset sales $0.8m (in flow)
Probiotec currently maintains a conservative balance sheet,with leverage below 1.5x on a pro forma basis
Underlying Cash Flow Generation ($’m) h/e 31/12/20EBITDA (Underlying) 7.4(-) Tax (0.9)(-) Working Capital 4.1(-) Interest Expense (1.1)= Cashflow from Operations 9.5(-) Capital Investments (1.1)(-) Acquisitions (33.0)(+) Net Debt Drawdown 39.1(+) Proceeds from Asset Sales 0.8= Underlying Net Cash Flow 15.2
Probiotec HY21 Results
$9.5m
Significant capacity exists to meet additional inorganic opportunities
Continuing our Strategy
10Probiotec HY21 Results
We remain focused on executing our growth strategy and look forward to providing updates ongrowth initiatives throughout the upcoming year
Maintain and develop relationships with Tier 1 customersLeverage Probiotec capabilities to expand product manufacturing in attractive categoriesDrive innovation with customers to maximise the revenue and margin opportunity
1
2Maximise opportunity from onshoring of domestic manufacturing Identify attractive opportunities to capture share from customers onshoring their productionUtilise existing capacity and/or use demand to underpin capacity expansions
3Proactively assess acquisition and capital investment opportunitiesDisciplined approach to acquisition opportunities in core manufacturing and packing sectorsIdentify attractive greenfield/brownfield opportunities
4Drive operational improvement and cost synergies Continue to leverage Probiotec’s core operational strength and customer service capabilities Optimise the Sydney packing footprintRemoval of Covid-19 related costs
Outlook
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While COVID-19 impacts are still being closely managed, we are increasingly confident about the short term outlook
for the business and excited about the outlook for the business into FY22 and beyond
We affirm our previously provided guidance that we expect FY21 EBITDA for our existing businesses will meet or
exceed FY20 performance, however revenue growth will be challenging prior to a recovery in FY22
Improved margins being achieved due to reduced cost base, portfolio rationalisation of low margin products and
continued focus on efficiency, synergies and cost-out programs
Multipack-LJM performance has been stronger than we anticipated at the time of the transaction
Probiotec continues to assess a range of inorganic growth initiatives, though we remain highly disciplined around
value and strategic focus when considering any acquisition
Probiotec HY21 Results
FY22 Roadmap
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Normalisation of cold and flu volumes into FY22
~$10m of new revenue from contracts secured in 2020 (onboarding over next 6-12 months)
Strong pipeline of tenders in process – emerging evidence of customers onshoring production
Multipack-LJM to deliver full year contribution in FY22
Business seeing strong growth over recent months, with most business secured under medium-term contracts
Opportunity for further growth as we cross sell services across the enlarged platform
Site consolidation in NSW providing earnings upside into FY22/23
Assessing a number of acquisition opportunities
Highly synergistic Co-Packing bolt-ons
New capabilities in consumer healthcare and cosmetics
Geographic expansion in pharma manufacturing
Organic Drivers Multipack-LJM Inorganic Opportunities
Probiotec HY21 Results
Probiotec is positioned for a break-out year in FY22 reflecting the investments made inexecuting our strategy over the last 2-3 years
Contact Us
Probiotec Limited
83 Cherry LaneLaverton NorthVIC 3026Australia
Email: info@probiotec.com.auTelephone: +61 3 9278 7555
www.probiotec.com.au
13Probiotec HY21 Results
14Probiotec HY21 Results